The VA streamline probably won’t be a viable option for much longer — as interest rates rise, it will make less and less sense for veterans to do a VA streamline because it only makes sense when they can actually lower their interest rate and lower their mortgage payment.

And interest rates aren’t going to stay low forever.

Here are just a couple of things to remember when doing a VA streamline — you don’t have to occupy the property and don’t forget your checklist required for the VA streamline.

VA Streamline Occupancy Rules
The occupancy requirement for an IRRRL is different from other VA loans. When you originally got your VA loan, you certified that you occupied or intended to occupy the home. For an IRRRL you need only certify that you previously occupied it.

VA Streamline Check List

Forms to be signed/filled out prior to submission

URLA (1003)

No Income, asset or liabilities listed (current lien holder and account number listed)

VA addendum to the URLA

Nearest living relative form

Certificate of Eligibility Form 26-1880

VA Benefit-Related Indebtedness Form 26-8937

Federal Collection Policy Notice Form 26-0503

Borrower’s authorization form for us to order credit supplement

IRRRL loan worksheet

When doing a VA streamline (or thinking about doing one) make sure that your loan officer knows about the VA streamline occupancy requirements – you don’t actually have to occupy the property. Many loan officers are not aware of this!

Also, now you have a checklist of what will be needed – and remember that many lenders are now requiring a middle credit score above 620 and possibly an appraisal as well. I say “many” because not “all” lenders are requiring these things. If your lender is telling you that they require a credit score and an appraisal, it is time to shop around.

For many years, the VA streamline refinance (aka the VA IRRRL program) did not require an appraisal in order for a Veteran to refinance their VA loan and get a lower interest rate.

But that may be changing.

It is not uncommon now for some lenders who lend money on these loans to require some form of an appraisal. It can be a full blown appraisal, it can be a drive-by appraisal — but the point is that many are now requiring it where before they did not. And FHA/VA has not changed their criteria for what they will insure — an appraisal is currently not required in order for a VA streamline to be insured.

As an example, an announcement by Wells Fargo to all correspondent lenders said:

“in an effort to mitigate the risk of declining home values on VA IRRRL transactions on May 18th will require the seller to obtain and deliver a conventional appraisal to Wells Fargo. Please Note: VA has indicated this appraisal should not be submitted to the VA with the guaranty package.”

Does this really make any sense?

Not really.

But it isn’t the first time that things haven’t made sense in the mortgage market recently.

If you are in the market for a VA streamline and your loan officer is telling you that an appraisal is now required, be sure to ask him if he has access to any other VA lenders – many lenders are still not requiring VA streamlines to have an appraisal.